Small pharma firms ride R&D wave

Economic reforms, they say, are no good unless the benefits trickle down to the lowest stratum. A stock market rally, they say, is not genuine unless it is broad-based. This is the litmus test that Indian pharmaceutical industry had failed.

In the early '90s, big names such as Dr Reddy's, Ranbaxy and Wockhardt got serious about developing new drugs, but the rest of the highly-fragmented sector "� 5,000 companies at the last count "� carried on capitalising on the country's weak intellectual property framework by making copy-cat versions of drugs patented elsewhere.

This, as it turns out, is no longer true. In the last couple of years, a host of unusual players have begun dreaming of new chemical entities, hitherto the preserve of the elite, and putting their money where their dreams are.

Egged on by the country embracing product patents in 2005, some mid-size and even smaller companies joined the R&D bandwagon. The list includes Cadila, Suven, Indoco, Strides Arcolab, Hikal, Panacea and US Vitamins among many others. 
 

JOINING THE BANDWAGON
Company	Location	Investment in R&D (Rs crore)	Focus area
Cadila Pharma	Ahmedabad	75.0	Biotech drugs
US Vitamins	Mumbai	25.0	Biotech and peptides
Indoco Remedies	Mumbai	22.5	API CRAMS & processes
Hikal	Mumbai	50.0	CRAMS
VHB Life Sciences	Mumbai	30.0	NCE & NDDS
Malladi Drugs	Chennai	25.0	NCEs in cough & cold
Artemis Healthcare	Delhi	20.0	Nanotech & stem cells
Strides Arcolab	Bangalore	18.0	HIV, malaria, TB
ABL Biotech	Chennai	25.0	Marine biotech
Panacea Biotech	(5 centres)	100.0	Biotech, vaccines, NCE

Analysts say many companies until two-three years ago invested less than 2 per cent of their annual turnover in R&D. They now earmark 6-8 per cent. A part of the budget also goes into carrying out research for bigger companies.

Hyderabad-based Suven Life Sciences, an 18-year old company, which is mainly into contract research and reported a turnover of Rs 114 crore last financial year, this week filed a new drug application with the Drug Controller General of India seeking permission to conduct clinical trials of a new Alzheimer's drug, the first from its R&D set- up. Next year, it will take its second molecule on anti-obesity into the clinical trial stage.

"We will start phase-I trials (limited testing on human beings to know how the drug reacts to the human body) within three months in Europe and India. We are talking to three multinational companies for out-licensing the Alzheimer's drug for further development," said Venkat Jasti, vice-chairman and managing director of Suven.

Chennai-based Malladi Drugs is investing Rs 25 crore in a new R&D centre, housing about 120 scientists to undertake novel drug research in select therapeutic areas such as cough and cold segment.

"Our research team has developed a new enzyme to prevent blood clots, which is now in the clinical trial stage. Our future research will focus on developing NCEs related to treatment of cough and cold," said M Parasanth, the company's managing director.

The Rs 140-crore Malladi Drugs is one of the world's largest manufacturers of two bulk drugs (raw material for drugs) ephedrine and pseudo ephedrine. VHB Life Sciences, a Rs 290-crore company, is putting Rs 30 crore into an R&D centre that will employ 50 scientists.

Mumbai-based Indoco Remedies last week commissioned a Rs 22.5-crore R&D centre in Navi Mumbai. As many as 100 scientists will work in the centre. Like Indoco, Hikal is looking to position itself as a contract research provider. It is investing Rs 50 crore in a centre that will house 100 scientists. The strength will be raised to 250. Cadila Pharmaceuticals, one of the oldest pharmaceutical companies in Ahmedabad, is planning a Rs 75-crore R&D facility to develop biotech drugs.

US Vitamins, a privately held company, is setting up a Rs 20-crore facility to focus on biotech drugs, whose patents have lapsed.